Yes, the jobs report was “bad” last month. Only 210,000 new jobs added. But that is only half the story:
Hiring slowed sharply in November, even before omicron, with 210,000 jobs added
The truth is that there are plenty of jobs – the JOLTS report (which reflects jobs open rather than filled) indicates there are more than 10 million available jobs at the end of September. So why were only 221,000 filled? Good question.
It turns out that the number of people in the workforce has dropped. It is currently 61.8%; pre-pandemic it was 63.3%. This means that roughly 4 million people are sitting out the recovery. A big reason might be the $300/month/child parents are being paid to … well, be parents. I know, I know – by itself the $300/month/child doesn’t seem like much, but when added to child care cost savings it will tip the scales towards staying home. Not a problem, if I wasn’t expected to pay for it.
Average day care per child is running about $200/week. This amounts to about $800/month. Assuming 3 children, that’s $2400/month. Add to that the child tax credit currently paid monthly, $300/month/child x 3 children = $900. Now we’re up to $3300/month in child care savings and government payments for a family with three children – that’s nearly 40K/year to stay home. Now, I don’t mind people staying home to raise their children – I just don’t want to pay them to do it. Not my child, not my pageant. Raise your own damn children. BTW, this increase in the child tax credit (it’s not so much a child tax credit as it is a tax on childless couples) was originally part of COVID relief legislation, but Biden’s “Build Back Broker” plan wants to make it permanent. The BBB plan includes “…permanent refundability for the Child Tax Credit…“, further incentivizing people not to work.
Now, again, I don’t mind people staying home to raise their children. And it’s fine that they remove themselves from the workforce to do so. But paying people to stay home and not work will only result in inflation. Think about it: money added to the economy (that we borrowed, no less) when less is being produced – the only possible outcome is inflation (unless our politicians balance the budget – fat chance of that ever happening…!).
And don’t give me any crap about how these parents are doing “valuable work” raising their children and thus should be paid; I’m not buying it. The work has value ONLY TO THEM, and thus it is only they who should pay for the work. Their circular argument goes something like this: I can’t afford to pay for a gardener, so I’m going to do my own gardening. But gardening is productive work, so I want to be paid for it – and thus the government should pay me. But the bullshit part of this argument is that the person who benefits from the labor is the one who should pay – in this case, the homeowner benefits from the work. They are free to pay themselves what they would have paid a gardener, but the result will be a wash. They did the work, they benefited from the work. Account closed. Get the hell out of my wallet!
The alternative is that the parents not be paid to stay home, and only reap the benefit of the child care savings. This would be fine – and since it introduces no new (unearned) money to the economy, inflation is not affected. Former childcare workers could actually go on to do other productive work. All is good with the world.
If we want the economy to improve, we must stop incentivizing people to not be productive, and – more importantly – we’ve got to stop paying them for non-productive (to the rest of the world) work like raising their own children. Only then will the workforce participation rate return to normal and inflation be tamed.